Geopolitical turmoil continues to disrupt global businesses – WTW report
Geopolitical turmoil continues to disrupt global businesses – WTW report | Insurance Business Asia
Insurance News
Geopolitical turmoil continues to disrupt global businesses – WTW report
Firms rate the top political issues disrupting their operations
Insurance News
By
Jonalyn CuetoJonalyn Cueto
In a challenging year marked by geopolitical events, 69% of companies around the world reported supply chain disruptions due to political events, according to a new report by WTW.
The “How are leading companies managing today’s political risks?” report, now in its seventh annual edition, reflects a shift from alarm to preparedness. The survey found that 96% of companies have invested in new political risk management capabilities. These investments include enhancing corporate processes and creating cross-functional teams.
State-sponsored supply chain disruptions, partly resulting from disruptions in the Red Sea and “grey zone aggression”—actions intended to weaken a country without open warfare—are among the top business concerns for 2024. For the first time, grey zone aggression has entered the top 10 risks.
Additional findings from the report include:
47% of companies experienced political risk losses exceeding US$50 million.
The conflict in Gaza has had less financial impact than the conflict in Ukraine, with 4% reporting significant financial impact from Gaza versus 20% from Ukraine.
Trends towards geostrategic competition and populism are expected to strengthen.
With the US heading into elections, 64% of respondents reported concern about political risk in North America, matching the concern for Asia.
Leading business risks
The top 10 risks for 2024 are the following.
Ukraine complications and escalation
Year of elections
US-China rivalry
Uncertain climate policy
Mismanaging China risk
Middle East escalation
The next big conflict
Home-market growth slowdown
Institutional decay
Grey zone action
“After a couple of challenging years, companies seem to have accepted that significant political risk losses are the new normal and are working on building risk management capabilities,” said Sam Wilkin, director of political risk analytics at WTW. He highlighted concerns about infrastructure attacks, such as sabotage of pipelines and cables, and attacks on assets in international waters, facilitated by the proliferation of drone technology.
An oil industry executive noted that while political risk is acknowledged, it does not deter operations and is managed within the broader risk management framework. Meanwhile, a European energy executive mentioned facing hybrid or grey zone threats due to the Ukraine war, including sabotage and cyberattacks like the Nord Stream attacks.
The conflict in Ukraine remains the top risk, followed by concerns about elections. With more citizens voting in 2024 than any time in the next few decades, managing political uncertainty and potential business repercussions is a significant challenge. Panelists expressed concerns about trade wars, rising protectionism, and populism.
The survey and interviews were conducted in March and April 2024 by Oxford Analytica, with responses from 50 companies worldwide, 64% of which have revenues exceeding US$1 billion.
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